Jason McGowan, 32, holding sign, stands with other protesters from ConnectCare to protest against the budget cuts for nursing homes and in-home care outside the State capitol steps in Austin on Tuesday.

AUSTIN — Leaders in the nursing home and in-home care industry warned Tuesday of dire consequences if the Legislature approves deep budget cuts.

And company executives took a new tack to protesting Medicaid reductions, arguing in business terms about thousands of employees being laid off, hundreds of firms closing and big economic spillover benefits lost to save a relatively small amount.

“What has happened to Texas’ being such a friendly environment for business?” said Gary Gerstenhaber, owner of an Austin firm that provides office supplies, printers and copy machines to nursing homes in Central and South Texas. “How many businesses can survive taking an immediate cut of 33 percent in their revenue stream?”

Gerstenhaber is part of a newly formed coalition of nursing home suppliers and service providers who held a Capitol news conference to denounce the cuts. Also Tuesday, about 200 home care executives, families receiving in-home services for frail relatives, nurses, therapists and personal care attendants held a rally outside the Capitol to protest cuts of between 26 percent and 37 percent to Medicaid’s in-home services.

Cuts to Medicaid, the state-federal health program for the poor, are potentially lethal to nursing homes and home health agencies, many already operating on profit margins as low as 4 percent, industry leaders said.

The industry extends into every town in Texas, and is trying to flex its political muscle. But it faces an uphill battle, as supporters of public schools, higher education and hospitals and doctors weigh in with what traditionally has been greater clout. Each group is trying to mitigate the damage as lawmakers look to close a shortfall that would require $23 billion more to keep current levels of state services — without raising taxes.

“The voice of business — the long-term care business — has not been heard in the policy debate,” said Toni Felts, senior vice president of MetroStat Labs of Garland, which provides mobile X-rays and lab services to the elderly at bedside in nursing homes.

She warned of a “chain reaction” if lawmakers eventually adopt a plan such as the House’s emerging two-year budget, which would whack Medicaid’s spending on nursing homes by $1.4 billion, to $2.8 billion.

Felts said many of the staffers on her company’s mobile units are single parents, and pink slips would create a huge crisis for them.

“We matter to the folks we employ,” Felts said. “We matter to the economy of our community.”

Dean Blackmor, a representative of Sulphur Springs-based Medicine Chest Pharmacy, which supplies drugs to nursing homes across the state, said it would be crazy for Texas to cut Medicaid payments just as the economy is picking up.

“We’re growing,” he said. “The cuts are too soon. They’re way too much. I’ve got [nursing] homes that will close” with the cuts facing the industry.

A two-year budget expected to be approved by the House Appropriations Committee on Wednesday would threaten closure for hundreds of Texas nursing homes, said Tim Graves, president of the Texas Health Care Association, which represents 450 nursing homes and 60 assisted-living facilities.

While most Medicaid providers under the House budget would take a 10 percent rate cut, Graves said nursing homes actually would absorb a 33 percent hit because two years ago, they were partly funded with federal stimulus funds — dollars that appear unlikely to be replaced by state budget writers.

The new Texas Coalition for Long Term Care Business urged lawmakers to empty the state’s $9.4 billion rainy day fund and raise new revenues. The group’s leaders, though, declined to recommend specific tax or fee increases.

Rep. Jim Pitts, chairman of the Appropriations Committee, said he dislikes the nearly $6 billion of state-revenue cuts that his panel’s budget would carve from Medicaid and the Children’s Health Insurance Program. That’s more than six times as large as cuts lawmakers approved for the two programs in 2003, during the state’s last fiscal crisis.

However, Pitts, R-Waxahachie, said opposition to higher taxes and fees within his own party is intractable.

“This is the reality of the situation,” he said. “I’m keenly aware of the big hole we have left in our budget.”

Sen. Eddie Lucio Jr., D-Brownsville, said the time’s almost come “when we will have to mention the dirtiest word in Texas — taxes.”

Putting aside business concerns, Gerstenhaber, the Austin office-supply vendor, said it would be “unconscionable” to let nursing homes close and dislocate their residents.

At the home care rally, New Braunfels foster mother Valerie Navarro said 3,100 medically fragile children receiving home care from Medicaid would lose vital services and equipment under a proposed 28 percent cut.

“A lot of these kids wouldn’t survive without home care,” she said. “They just wouldn’t.”

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